Crypto Innovation Must Not Come at the Expense of National Security

By creating broad exemptions and carve outs for crypto special interests, the legislation would interfere with law enforcement and national security officials’ ability to identify who is moving money, where it is going and whether it is tied to sanctioned actors. Without strong Know Your Customer (KYC) and Anti Money Laundering (AML) standards, bad actors in Iran and North Korea can use crypto to fund terrorism, launder money for criminal activity, and undermine our critical defense tools.

The danger is not theoretical.

North Korea stole more than $2 billion in crypto assets in 2025, most of which was used to fund their weapons program. And Iran has a history of using crypto to evade sanctions, fund terrorist proxies and move money outside the reach of U.S. authorities. In June, the U.S. Treasury Department sanctioned Nobitex, Iran’s largest digital asset exchange, saying it facilitated payments tied to these activities, including transactions for the Islamic Revolutionary Guard Corps. Now, Iranian bad actors are extorting tolls from commercial vessels seeking passage through the Strait of Hormuz and demanding that payments be made exclusively in crypto.

Congress cannot respond to these threats by weakening the financial tools America uses to track and stop illicit finance.

Drug cartels, human traffickers, ransomware groups, sanctioned regimes and terrorist financiers are always looking for weakness in the financial system. Any digital asset framework must strengthen America’s ability to trace illicit funds, enforce sanctions, recover stolen money and hold bad actors accountable. This is not just a matter of financial system integrity: our public safety depends on it.

As the Executive Director and founding member of the Kentucky Narcotic Officers’ Association representing over 400 narcotic officers in Kentucky, I can attest to how drug cartels rely on crypto for financing today. Cartels use crypto to hide their identities, launder drug profits, and move funds quickly in and out of the United States while evading law enforcement. The fight against cartel trafficking is already an uphill battle, and without the ability to trace and follow cartel transactions, it becomes even harder for law enforcement to catch and stop traffickers. Law enforcement needs every tool they can get to win this fight, and we cannot afford to make it even easier for cartels to bring more fentanyl into our country.

America has the potential to lead the world in digital assets but only if we protect what made our markets strong in the first place: trust, transparency, accountability, and national security. Without proper safeguards, foreign adversaries––including cartels, terrorists in Iran and criminals in North Korea—will continue to target our country’s global standing and scam and defraud the everyday investors that uphold our markets. If these investors lose trust in the financial system, we risk forfeiting digital asset innovation to our adversaries.

A strong market structure bill would promote innovation while preserving the tools needed to stop criminal activity, protect investors, and defend U.S. interests, which is why Congress must reject the CLARITY Act.

Lawmakers have a responsibility to get this right and protect the integrity of our markets, defend our national security, and ensure digital asset innovation is built on trust.